REG - PCI-PAL PLC - Interim Results, Analyst Briefing & Investor Pres
01/03/2022 07:00
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RNS Number : 1095D PCI-PAL PLC 01 March 2022
This announcement contains inside information for the purposes of Article 7 of
the Market Abuse Regulation (EU) 596/2014 as it forms part of UK domestic law
by virtue of the European Union (Withdrawal) Act 2018 ("MAR"), and is
disclosed in accordance with the company's obligations under Article 17 of
MAR.
PCI-PAL PLC
("PCI Pal" or "the Group" or "the Company")
Interim Results, Analyst Briefing & Details of Investor Presentation
PCI-PAL PLC (AIM: PCIP), the global cloud provider of secure payment solutions
for business communications, is pleased to announce its unaudited interim
results for the six months to 31 December 2021.
Financial highlights for the period
· Revenue increased 72% year on year to £5.47 million (2020:
£3.19 million)
· Gross margin improved to 81% (2020: 73%)
· Recurring revenues represent 90% of total revenue (2020: 86%)
· New ACV(1) contract sales in the period were £1.76 million
(2020: £1.68 million)
· TACV(2) as of 31 December 2021 increased to £11.34 million
(2020: £8.27 million)
· ARR(3) as of 31 December 2021 increased to £8.96 million (2020:
£5.89 million)
· Loss from operating activities in line with expectations at
£1.10 million (2020: £2.15 million)
· Cash at period end of £5.53 million (30 June 2021: £7.52
million). The Group is debt free.
Operating highlights in the period
· Partner eco-system performing well and growing with 81% of new
customer contracts from channel partners
· New business ACV ahead of management expectations
· Excellent upsell success within existing customer base resulting
in strong NRR(4) of 120%
· Customer retention strong throughout period, with churn(5) at
just 3.5%
· New strategic initiatives progressing despite challenging global
hiring market:
o Canada team established in December 2021
o New product team resources hired during H1
· Strong operational performance with TTGL(6) better than
management expectations, and strong NPS(7) scores for both delivery and
service
· High employee retention at 96% despite challenging employment
markets worldwide
· Added two new members to the PCI Pal Advisory Committee ("PAC"),
both US-based with Customer Success, Cloud, and Product Management expertise
· Mounted robust defence and counterclaims to unfounded patent
infringement allegations from competitor
Current trading
Strong trading momentum has continued into the second half with highlights
since 31 December 2021 including:
· Strong start to H2 with new business sales in line with
management expectations
· Revenue momentum continuing, with strong visibility of full year
number
· Australian business launched with first hires now joined
· Won Best Compliance Product at the CX Awards 2022
(1 )ACV is the annual recurring revenue generated from a contract.
(2 )TACV is the total annual recurring revenue of all signed contracts,
whether invoiced and included in deferred revenue or still to be deployed
and/or not yet invoiced.
(3 )ARR is the Annual Recurring Revenue of all the deployed contracts.
(4 )NRR is the net retention rate of the contracts that are live on the AWS
platform rate and is calculated using the opening total value of deployed
contracts 12 months ago less the ACV of lost deployed contracts in the last 12
months plus the ACV of upsold contracts signed in the last 12 months all
divided by the opening total value of deployed contracts at the start of the
12 month period.
(5) Churn is calculated using the ACV of lost deployed contracts on the AWS platform in the last 12 months divided by the opening total value of deployed contracts 12 months ago.
(6) TTGL is Time-To-Go-Live measurement used by the Group and defines the
average time taken for a contract to be fully deployed from the date of
signature of that contract.
(7)( )Net Promoter Score (NPS) is a customer loyalty and satisfaction
measurement taken from asking customers how likely they are to recommend your
product or service to others.
Commenting on the results for the period, James Barham, Chief Executive
Officer said:
"We have delivered another strong period of growth whilst at the same time
making substantial progress against our expansion plans for the year. I am
particularly pleased that despite the headwinds of a challenging global hiring
market, as well as the unfounded patent claims being made against us by a
competitor, we have been able to continue to deliver on these expanded plans;
growing revenue substantially; adding key new strategic resellers to our
market-leading partner eco-system; and adding exciting new talent to our
existing people resources.
"It is this execution against our current plans, as well as the long-term
strategic opportunities in front of us through further expansion and product
development, that give me great confidence in the outlook for the Company
which remains on track to achieve market expectations for the current
financial year."
Analyst Briefing: 9.30am on Tuesday 1 March 2022
An online briefing for Analysts will be hosted by James Barham, Chief
Executive Officer, and William Good, Chief Financial Officer, at 9.30am on
Tuesday 1 March 2022 to review the results and prospects. Analysts wishing to
attend should contact Walbrook PR on pcipal@walbrookpr.com
(mailto:pcipal@walbrookpr.com) or 020 7933 8780.
Investor Presentation: 3.00pm on Thursday 3 March 2022
The Directors will hold an investor presentation to cover the results and
prospects at 3.00pm (UK time) on Thursday 3 March 2022.
The presentation will be hosted through the digital platform Investor Meet
Company. Investors can sign up to Investor Meet Company and add to meet
PCI-PAL PLC via the following link
https://www.investormeetcompany.com/pci-pal-plc/register-investor
(https://www.investormeetcompany.com/pci-pal-plc/register-investor) For
those investors who have already registered and added to meet the Company,
they will automatically be invited.
Questions can be submitted pre-event to pcipal@walbrookpr.com
(mailto:pcipal@walbrookpr.com) or in real time during the presentation via the
"Ask a Question" function.
For further information, please contact:
PCI-PAL PLC Via Walbrook PR
James Barham - Chief Executive Officer
William Good - Chief Financial Officer
finnCap (Nominated Adviser and Broker) +44 (0) 20 7227 0500
Marc Milmo / Simon Hicks (Corporate Finance)
Richard Chambers (Corporate Broking)
Walbrook PR +44 (0) 20 7933 8780
Tom Cooper/Paul Vann +44 (0) 797 122 1972
tom.cooper@walbrookpr.com (mailto:tom.cooper@walbrookpr.com)
About PCI Pal:
PCI Pal is a leading provider of Software-as-a-Service ("SaaS") solutions that
empower companies to take payments from their customers securely, adhere to
strict industry governance, and remove their business from the significant
risks posed by non-compliance and data loss. Our products secure payments and
data in any business communications environment including voice, chat, social,
email, and contact centre. We are integrated to, and resold by, some of the
worlds' leading business communications vendors, as well as major payment
service providers.
The entirety of our product-base is available from our global cloud platform
hosted in Amazon Web Services ("AWS"), with regional instances across EMEA,
North America, and ANZ. PCI Pal products can be used by any size organisation
globally, and we are proud to work with some of the largest and most respected
brands in the world.
For more information visit www.pcipal.com (http://www.pcipal.com) or follow
the team on LinkedIn:
https://www.linkedin.com/company/pci-pal/
(https://www.linkedin.com/company/pci-pal/)
Chief Executive Officer's Business Review
Overview
We have made an excellent start to the financial year, with all key metrics
either at or ahead of management expectations for the period. Revenue for the
Group has increased substantially, up 72% year on year to £5.47 million,
illustrating the continuing build-up of new customer contracts combined with
high customer retention rates. Given we have increased our key growth metric
and indicator of future revenues of TACV by 37% to £11.34 million (2020:
£8.27 million), we expect revenue growth to continue in line with market
expectations.
It is particularly pleasing to report that despite the unfounded patent
infringement lawsuit and a challenging hiring market worldwide, not only have
we maintained our sales momentum, but we have also been able to drive the
recruitment needed to execute against our escalated expansion plans following
the fund raise in April 2021. This progress has included the establishment of
our Canadian business, broadening the scope of our North American efforts, and
continued investment into our engineering and product development
capabilities. Since the half year, we have now also launched in Australia.
The PCI Pal partner eco-system has further strengthened in H1 as we continue
to sign new strategic partners, both global and regional in nature. We now
have a close working relationship with over two thirds of the major
organisations that make up the CCaaS Gartner magic quadrant for 2021. New
contracts from our channel partners make up 81% of the total in the period
(2020: 75%). Overall new business wins were marginally ahead of management
expectations with new ACV of £1.76 million (2020: £1.68 million). Further
growth is anticipated in H2 as our newly recruited additional sales resources
and marketing investment come "online" in the US, Canada and Australia.
In the first full financial year with our new Customer Success function in
place we report strong NRR, which increased to 120% (30 June 2021: 111%). Our
customer retention efforts continue to be successful, resulting not just in
expansion of contract values of direct and reseller customer accounts, but
also in achieving customer churn of just 3.4%.
People
At PCI Pal we have a corporate objective to: "create a culture that people
want to be part of", and this is a critical consideration when we look at both
retention of existing employees as well as attracting new talent to the
Company. This year our ambition was to take this focus on our people to the
next level: investing further; considering carefully our processes around
learning and development; and improving the tools available to the business,
managers and their teams to empower them to be successful. I'm pleased to
report that we've made excellent progress against these plans in the first
half.
Shortly after the start of the financial year in July 2021, we saw a change to
the global jobs market for technology professionals. The "War for Talent" had
begun, brought about by imbalance of supply and demand of quality candidates.
Through further strengthening of our recruitment processes and hiring
strategies we have remained on target with our new expansion plans, which are
heavily reliant on additional people resource.
I am pleased to say that through building a strong culture, we have also
performed well in retaining talent at PCI Pal, with employee retention of more
than 89% for the period. One of our key values is "enjoy the journey", and we
believe this message is not just about the journey in the workplace and a
person's career, but also about satisfaction, mental well-being, and
progression in life. We believe that with these considerations in focus, we
are building a positive environment and culture that will continue to support
our fast-paced growth.
Our people are critical to this business continuing to be successful and
achieving its goals, and we will continue to strive to lead our market in this
regard with the focus we have on our culture and employer brand.
PCI Pal Advisory Committee ("PAC")
Given our strategic focus to be the leader in channel and cloud technology in
our market, we have further expanded the PAC with two experienced executives,
both-US based, covering the fields of customer success and international cloud
products and services. The PAC works with myself and the Board to provide
insight and experience into day-to-day opportunities and challenges; as well
as providing thought leadership on key strategic topics that we are
considering as we continue to unfold the long term strategic plan for the
business.
Unfounded Patent Infringement Claims
In September 2021, one of our main competitors, Semafone Ltd filed lawsuits in
both the UK and the US relating to alleged patent infringement by PCI Pal. We
strongly refute the claims. Since our formation we have regularly taken
detailed steps to ensure we do not infringe on any third-party intellectual
property rights, which has included Semafone. As the first company to launch
cloud solutions in the market, PCI Pal has its own IP for the innovative cloud
technologies that it has brought to the secure payments space, making secure
payment solutions easier to access, more cost efficient, and available
globally.
Since the allegations were made, our legal teams have provided detailed
submissions to the courts that clearly explain our position on
non-infringement and the invalidity of the Semafone patents. We will defend
ourselves from a position of strength given the continued growth trajectory of
the business, a varied secure payments product set, as well as our continued
investment into products and services upon which this case has no bearing. As
announced in November 2021, the Company has filed its UK defence and
counterclaim to the UK Court in response to the claims made against the
Company and in the US, PCI Pal has made an application to the US Court for it
to invalidate the Semafone US patents under section 101 of the US Patent Act.
Both of these actions are ongoing.
We will continue to consider all the options available to us in order to find
the outcome that we believe will best benefit the business and shareholders.
Due to the continuing strong financial performance this year we continue to be
well funded, which will allow us to see out the process to its fullest extent
as we challenge these unfounded claims.
PCI Pal cloud & product development
PCI Pal was the first to launch a true cloud solution in its market, and as a
result has the most mature and most utilised platform, with more than 400
customers, including numerous large global enterprises, now leveraging our
secure payment services. We brought this disruptive approach to a market which
was previously burdened by hardware led, on-premise solutions, and as a result
we have empowered our customers to secure their own customers' data through
the use of our highly flexible, light-touch, and easy-to-integrate cloud
solutions.
Amazon Web Services is our chosen provider of virtualised cloud services where
we host our platform today. Validating this technology strategy, AWS is the
most commonly used cloud hosting provider across all our partners. This cloud
strategy has been a key factor in our capability to partner with some of the
world's leading technology companies in the business communications (CCaaS and
UCaaS) and payments markets. Our partner eco-system continues to grow from
strength to strength and includes many international technology providers
including Genesys, Worldpay, 8x8, Vonage, and Talkdesk.
The PCI Pal cloud incorporates availability zones across AWS that cover
Europe, North America, and Australia. With all zones having been established
for a number of years, we are well positioned for the platform to support our
escalated growth plans as we add people resource to the new regions of Canada
and Australia where to date we have built up a customer-base selling entirely
remotely. The PCI Pal platform is designed to enable us to expand our global
reach at pace, while maintaining high uptime reliability of our services. As
we continue to grow internationally, the platform will not only support that
expansion but also provides a foundation from which we are evolving our
product offerings in line with our ambitious long-term plans.
Product
Our core products today cover the entire spectrum of business communications;
Agent Assist, our live contact centre agent secure payment tool; IVR, our
fully automated service for auto-attendant environments where no agent is
involved; and Digital, our solution that empowers businesses to handle secure
payments through any number of digital channels such as chat, social, SMS,
email and more.
Since the fundraising in April 2021 and following the planned hire of our new
CTO in May of that year, we have in FY22 further expanded our engineering and
product resources in order to support our new escalated ambitions for PCI Pal
products. As we look to capitalise on our global platform and leading market
position, we have added further experience and talented people to the
engineering team, as we execute two key product initiatives. The first is to
continue to refine our market leading core cloud offering today; and the
second to make progress towards our wider, complementary product ambitions. We
look forward to updating investors in H2 as our new product initiatives gather
pace.
Continued sales and partner growth
Sales & revenue growth
In the first half, we have taken another sizeable step forward in revenue
growth, achieving revenues in the period of £5.47 million which was ahead of
expectations, and an excellent 72% increase year on year. With 71% of Group
revenue generated by our more mature EMEA business (£3.89 million), we are
pleased to report our first period of EBITDA profitability for the region,
meaning we are on track to reach our mid-term goals for our first months' of
Group profitability in FY23.
Contributing to the revenue performance is our operational capability to
rapidly get our customers live and to the point of revenue recognition. We
continue to perform well, and as a result ARR has increased considerably to
£8.96 million (2020: £5.89 million), with our key deployment metric of TTGL
ahead of management expectations for the period at 22 weeks. It is
particularly encouraging to me that these new customers are going live with
high satisfaction levels; with our NPS for implementations in the period 138%
of global benchmarks for businesses in similar industries.
Our TACV growth has been strong, supported by new business ACV contract sales
which were marginally ahead of management expectations for the half year at
£1.76 million (2020: £1.68 million). This is a pleasing result given the
sales teams have yet to benefit from the additional sales heads that have
joined us late in the period (and in the start of H2). Partners accounted for
81% of new contracts compared to 75% in 2020. TACV has grown by 37% to be
£11.34 million as at 31 December 2021 (2020: £8.27 million).
Sales highlights for H1 include the continued volume of new contracts from the
key small to mid-size sector of the market, as well as a number of
strategically important enterprise customers which included one of the largest
pharmaceutical companies in the world. With the first phase of this customer's
deployment now live, the account brings with it significant on-going potential
for account growth. In addition, we successfully expanded some of our existing
enterprise-level customers which has contributed directly to our strong NRR
metric in the period of 120%.
North America
Our North American operation is growing rapidly thanks to our strong partner
relationships and a growing recognition of our solutions in the region. We are
particularly pleased with the step forward we have made in TACV which has
grown 45% to £3.46 million (2020: £2.39 million). As a result, revenue in
the first half grew 89% to £1.58 million (2020: £0.84 million).
New ACV sales bookings for the first half were as expected at £0.77 million
(2020: £0.70 million), and this growth was against a strong comparable that
included the build-up of delayed sales last year as a result of the onset of
the pandemic. During H1 we expanded our sales and marketing presence and so we
are expecting further growth in new contracts as the new members of the sales
team begin to contribute to sales delivery. 78% of new contracts in North
America have been won through channel partners, and this accounted for 71% of
the total new ACV value achieved in the period.
The North American operation continues to be a significant growth opportunity,
with the vast majority of our global partners having headquarters in the US.
Partner eco-system
We are a partner-first business and during the period we have continued to
strengthen those key partnerships with the likes of Genesys, 8x8 (with whom we
signed a recent multi-year extension to our previous rolling reseller
agreement), Sitel, and Talkdesk. Driven by the value we represent to these
partners, we have started to see these relationships deepen, achieving
priority ranking in their marketplace offerings and invitations to join their
partner advisory boards. This positions us strongly, particularly where
partners have a marketplace offering, taking PCI Pal to the next level of
engagement where we are the preferred solution offered by their own sales
teams.
We signed a number of new partners in the period, further expanding our core
eco-system. New partnerships included CCaaS and CPaaS providers as well as a
number of new international BPO partners won as a result of our specific
targeting of that sector in the last 18 months.
The highlight partnership signed was with Amazon, where we now have an
approved integration to their contact centre platform, Amazon Connect. We have
agreements in place that allow Amazon customers to procure PCI Pal's services
via their own existing AWS Marketplace agreements. As the first global vendor
to achieve this, we are very excited about the long-term potential this
relationship will bring as we continue our on-boarding process navigating
their extensive global eco-system.
Geographic expansion
As planned, we successfully launched our Canadian operation with our first
hires starting at the back end of Q2. With headquarters in Toronto, our
initial sales and marketing focused team will benefit from the Group's
partnerships with global providers who have presence in the region; as well as
from direct sales opportunities as a result of a largely untapped payment
security market in Canada. PCI Pal is the only company in our space with
dedicated in-country resources, something we find critical to being able to
truly support global partners' teams anywhere in the world.
I am also pleased to report that since the start of H2 we have now launched
our Australian business with our first hires now with us. Those hires come
with extensive knowledge of both the wider business communications market in
Australia and New Zealand, as well as more specific knowledge of our secure
payments space, and again will work closely with our existing Partner
eco-system in ANZ.
Current Trading & Outlook
Having traded ahead of management expectations for the first half of the year,
we have also made a positive start to H2 with strong revenue growth
continuing. Due to the nature of our revenue model, visibility for the full
year is strong and we are therefore confident of achieving the recently
upgraded market forecasts.
New sales bookings in the two months to the end of February 2022 have been in
line with management expectations, and have included highlight wins such as a
Fortune 500 US retailer, a FTSE100 oil and gas company, and a further new
contract with a major central government agency in the UK. All three contracts
were won through reseller partners.
With the continued progress being made by the Company I am looking forward
with great confidence as we continue to increase our geographic reach, partner
eco-system and customer numbers. We continue to see excellent opportunities
for our class-leading cloud solutions with organisations across the world.
James Barham
Chief Executive Officer
1 March 2022
CFO's Financial Review
The Group's financial performance for the six months to December 2021 has been
very good, with all key financial metrics either meeting or exceeding target.
Revenue and gross margin
Group revenue grew by 72% to £5.47 million (2020: £3.19 million) and gross
margin improved to 81% (2020: 73%). These improvements continue to reflect the
high quality recurring revenues from the Group's growing customer base paired
with the operational efficiency of its full cloud PCI Pal platform, hosted on
AWS. With a low churn rate and strong new sales, we expect this growth to
continue.
The Group's revenue reflects its SaaS business model. It sells its services
mostly through channel partners to customers who use PCI Pal solutions in
their contact centres. These customers are typically charged on a recurring
licence basis. The terms of the sales contracts generally allow for automatic
renewal of the licences for a further 12-month period at the end of their
initial term. Of the revenue recorded in the period, 90% (2020: 86%) has come
from annually recurring licences or transactions.
With a sales performance ahead of management expectations in the period, TACV
at the half year has grown to £11.34 million (2020: £8.28 million), which
provides the Group with a high visibility of revenue for the remainder of the
financial year. More importantly, customers have continued to go live with our
services in line with our TTGL expectations and as a result our ARR of "live"
contracts has increased by 52% and stood at the period end at £8.96 million
(2020: £5.89 million).
Churn and Net Retention
As the Group continues to grow it has invested further in the Customer Success
function. The Directors are pleased to report that its positive Net Revenue
Retention ("NRR"), for its AWS platform, has increased to 120% (30 June 2021:
111%), which has included a number of expansion sales to several
enterprise-sized customers. Additionally, customer churn on the platform has
further improved to 3.5% (30 June 2021: 6.7%).
Administrative expenses
Total administrative expenses were £5.54 million (2020: £4.47 million), an
increase of 24%.
The Group has continued to take on new headcount to support its international
growth and product development plans with the number of employees increasing
from 71 as at 30 June 2021 to 86 at the period end.
Personnel costs charged to the Statement of Comprehensive Income (including
commission, bonuses and travel and subsistence expenses) were £4.02 million
(2020: £2.95 million), of which £0.47 million (2020: £0.39 million) were
capitalised as Software Development costs. Personnel costs make up 73% (2020:
73%) of the normalised administrative costs of the business.
The expense of running our AWS platform and associated software was £0.45
million in the period (2020: £0.38 million). This expense includes the
platforms used for developing, staging and testing of our solutions, as well
as the cost of running the six production instances active today.
Included in the administrative expenses is a credit for foreign exchange
movements of £0.33 million (2020: charge of £0.37 million) which has been
caused by the weakening of the US dollar from $1.3969 as at 30 June 2021 to
$1.3215 as at 31 December 2021. Depreciation/amortisation of £0.45 million
(2020: £0.35 million) has also been charged.
Exceptional costs
In September 2021, Semafone Limited, a competitor of the Group, filed a
lawsuit in both the UK and US relating to alleged patent infringements by PCI
Pal. The Directors strongly refute the allegations being made and have
instructed UK and US lawyers to prepare the defence of the claim. To the end
of December 2021, the Group had incurred £0.28 million of legal fees relating
to the patent claim and these expenses have been treated as an exceptional
item in the Group's Statement of Comprehensive Income.
Expansion plans
In April 2021 the Group raised £5.2 million net of expenses from our
shareholders to help fund its further international expansion, especially into
Canada, Australia, and to allow further development of its products and
solutions.
The Group has now opened up subsidiaries in Canada and Australia and the first
key hires have been made with employees having started in December and
February respectively. The expansion plans are on track. Notwithstanding the
challenging recruitment market, we have been able to keep strategic hiring in
line with our plans, but we have experienced a financial benefit as a result
of delays to some other hires where positions were slower to fill. As a
result, this has helped produce the smaller adjusted operating loss for the
period than originally expected..
Looking forward to the second half of the financial year, we have now caught
up with the majority of the delayed hires and so therefore would not expect
these one-off operational savings to be repeated in H2. As a result, our
Administrative Expenses will return to the expected level meaning our adjusted
operating loss for the second half of the year will be higher than the first
half.
Adjusted operating loss
The regional operating results and underlying performance analysis used within
the Group are shown in Notes 4 & 5 below. Adjusted operating losses,
excluding the charges resulting from the Group's share option scheme,
exceptional costs and any exchange gains and losses charged to the Income
Statement, improved 39% to a loss of £1.04 million (2020: £1.71 million).
Adjusted EBITDA losses improved by 57% to a loss of £0.58 million (2020:
£1.36 million). Of particular note is that the EMEA operation, the Group's
largest division, reported its first Adjusted EBITDA profit of £0.69 million
(2020: loss of £0.17 million).
Key financial performance indicators
The Directors use several Key Financial Performance Indicators (KPIs) to
monitor the progress and performance of the Group, its subsidiaries and
targets. All the core KPIs continue to show performance ahead of expectations.
The principal financial KPIs are as follows:
As at 31 Dec 2021 Change % As at 30 Jun 2021 Change % As at 31 Dec 2020
Revenue in the six month period £5.47m +31% £4.17m +31% £3.19m
Gross Margin in the six month period 81.2% 77.6% 72.8%
Recurring Revenue(1) in the six month period £4.95m +33% £3.73m +57% £2.75m
Recurring Revenue as % of Revenue in six month period 90% 89% 86%
Adjusted EBITDA(2) in six month period (£0.58m) +52% (£1.20m) +12% (£1.36m)
Cash facilities available(3) £5.53m £7.52m £4.23m
Deferred Income £8.75m £8.09m £6.36m
(1) Recurring Revenue is the revenue generated from the recurring elements of
the contracts held by the Group and recognised in the Statement of
Comprehensive Income
(2) Adjusted EBITDA is the loss on Operating Activities before depreciation
and amortisation, exchange movements charged to the profit and loss,
exceptional items and expenses relating to share option charges
(3) Cash balance plus undrawn debt facilities
The principal operational KPIs are as follows:
As at 31 Dec 2021 Change % As at 30 Jun 2021 Change % As at 31 Dec 2020
Contracted TACV(1) deployed and live £8.96m +17% £7.69m +31% £5.89m
Contracted TACV in deployment £1.89m +69% £1.12m -47% £2.11m
Contracted TACV - projects on hold £0.49m -30% £0.70m +159% £0.27m
Total Contracted TACV £11.34m +19% £9.51m +15% £8.27m
ARR(2) £8.96m +17% £7.69m +31% £5.89m
Signed ACV in six month period £1.76m +23% £1.43m -15% £1.68m
ACV of contracts cancelled before deployment in last 12 months £0.12m £0.20m Not Calculated
AWS Platform Churn(3) 3.4% 6.7% Not Calculated
AWS Platform Net Retention Rate(4) 120.4% 111.1% Not Calculated
Headcount at end of period (excluding non-executive directors) 86 71 65
Ratio Personnel cost to normalised administrative expenses 73% 71% 73%
(1)TACV is the total annual recurring revenue of all signed contracts, whether
invoiced and included in deferred revenue or still to be deployed and/or not
yet invoiced
(2) ARR is the Annual Recurring Revenue of all the deployed contracts
(3)AWS platform churn is calculated using the ACV of lost deployed contracts
in the last twelve months divided by the opening total value of deployed
contracts at the start of the twelve month period
(4) AWS platform net retention rate is calculated using the opening total
value of deployed contracts at the start of the period less the ACV of lost
deployed contracts in the period plus the ACV of upsold contracts signed in
the period all divided by the opening total value of deployed contracts at the
start of the period
Cashflow and liquidity
Cash as at the period end was £5.53 million (30 June 2021: £7.52 million)
and finished the period ahead of the Directors' expectations.
The Directors, on a monthly basis, receive standard reports relating to cash
forecasts and future cash burn to ensure that the Group's ambitious expansion
plans can continue to be financed comfortably. The Group is currently debt
free, having repaid its last borrowing in June 2021. The Directors would
consider establishing a new debt facility, if required.
Capital expenditure
As required by IAS 38, we have capitalised a further £0.47 million (2020:
£0.39 million) in software development expenditure as we continue to invest
in our cloud platform and introduce new features and products.
The Group acquired £0.09 million of other intangible assets (2020: £0.08
million) and bought a negligible amount of new computer equipment in the
period, mainly equipment for new starters. Being a cloud-based business, the
Group has little demand for hardware.
Professional Services Fees
During the period the Group generated £0.63 million (2020: £0.79 million) of
set-up and professional services sales value, in conjunction with the new ACV
contracts reported above. Nearly all of these contracts are invoiced on
signature and form part of the Group's cash generation. The contract amounts
will be deferred and released as recognised revenue to the Income Statement
over the length of the related contract, in accordance with IFRS 15.
Trade receivables
Trade receivables grew to £3.00 million (30 June 2021: £2.15 million)
reflecting the increased scale of the growing business.
William Good
Chief Financial Officer
1 March 2022
Consolidated statement of comprehensive income
for the six months ended 31 December 2021
Six months ended 31 December Six months ended 31 December Twelve months ended 30 June
2021 2020 2021
£'000 £'000 £'000
(unaudited) (unaudited) (audited)
Revenue 5,472 3,190 7,362
Cost of sales (1,029) (869) (1,805)
Gross profit 4,443 2,321 5,557
Administrative expenses (5,543) (4,467) (9,518)
Loss from operating activities (1,100) (2,146) (3,961)
Adjusted loss from operating activities (707) (2,075) (3,846)
Expenses relating to share options (108 (71) (115)
Exceptional Items (285) - -
Loss from operating activities (1,100) (2,146) (3,961)
Bank charges and interest payable (22) (108) (230)
Interest receivable - - -
Loss before taxation (1,122) (2,254) (4,191)
Taxation - 153 154
Total comprehensive loss for the period (1,122) (2,101) (4,037)
Other comprehensive expense: items that will be classified subsequently to
profit and loss
Foreign exchange translation differences (422) 434 653
Total comprehensive loss for the period (1,544) (1,667) (3,384)
Loss per share expressed in pence
Basic and diluted (1.72) (3.54) (6.64)
Consolidated statement of financial position
as at 31 December 2021
31 December 2021 31 December 30 June
2020 2021
£'000 £'000 £'000
(unaudited) (unaudited) (audited)
Assets
Non-current assets
Plant & equipment 87 82 74
Intangible assets 2,516 2,296 2,366
Trade & other receivables 822 560 801
Non-current assets 3,425 2,938 3,241
Current assets
Trade and other receivables 3,945 2,944 2,928
Cash and cash equivalents 5,528 4,228 7,518
Current assets 9,473 7,172 10,446
Total assets 12,898 10,110 13,687
Liabilities
Current liabilities
Trade and other payables (1,625) (1,278) (1,664)
Deferred Income (7,165) (4,549) (6,153)
Other interest-bearing loans and borrowings - (1,156) -
Current liabilities (8,790) (6,983) (7,817)
Non-current liabilities
Deferred Income (1,587) (1,814) (1,941)
Long term borrowings - (964) -
Non-current liabilities (1,587) (2,778) (1,941)
Total liabilities (10,377) (9,761) (9,758)
Net assets/(liabilities) 2,521 349 3,929
Shareholders' equity
Share capital 656 595 655
Share premium 14,270 9,050 14,243
Other reserve 512 360 404
Currency reserve 44 247 466
Profit and loss account (12,961) (9,903) (11,839)
Total shareholders' equity 2,521 349 3,929
Deferred income has been disclosed separately in these interim unaudited
statements. This disclosure treatment differs from that in the audited
accounts for the year ending 30 June 2021.
Consolidated interim statement of changes in equity
as at 31 December 2020 (unaudited)
Total shareholders' equity
Share capital Share premium Other reserve Profit and loss account Currency reserve
£'000 £'000 £'000 £'000 £'000 £'000
Balance at 1 July 2020 594 9,018 289 (7,802) (187) 1,912
Share based payment charge - - 71 - - 71
New shares issued net of costs 1 32 - - - 33
Dividend paid - - - - - -
Transactions with owners 1 32 71 - - 104
Foreign exchange translation differences - - - - 434 434
Loss for the period - - - (2,101) - (2,101)
Total comprehensive loss - - - (2,101) 434 (1,667)
Balance at 31 December 2020 595 9,050 360 (9,903) 247 349
Balance as at 1 January 2021 595 9,050 360 (9,903) 247 349
Share based payment charge - - 44 - - 44
New shares issued net of costs 60 5,193 - - - 5,253
Dividend paid - - - - - -
Transactions with owners 60 5,193 44 - - 5,297
Foreign exchange translation differences - - - - 219 219
Loss for the period - - - (1,936) - (1,936)
Total comprehensive loss - - - (1,936) 219 (1,717)
Balance at 30 June 2021 655 14,243 404 (11,839) 466 3,929
Balance at 1 July 2021 655 14,243 404 (11,839) 466 3,929
Share based payment charge - - 108 - - 108
New shares issued net of costs 1 27 - - - 28
Dividend paid - - - - - -
Transactions with owners 1 27 108 - - 136
Foreign exchange translation differences - - - - (422) (422)
Loss for the period - - - (1,122) - (1,122)
Total comprehensive loss - - - (1,122) (422) (1,544)
Balance at 31 December 2021 656 14,270 512 (12,961) 44 2,521
Consolidated statement of cash flows
for the six months ended 31 December 2021
Six months ended 31 December Six months ended 31 December Twelve months ended 30 June
2021 2020 2021
£'000 £'000 £'000
(unaudited) (unaudited) (audited)
Cash flows from operating activities
Loss after taxation (1,122) (2,101) (4,037)
Adjustments for:
Depreciation of equipment and fixtures 36 35 69
Amortisation of intangible assets 42 40 76
Amortisation of capitalised development 374 271 595
Interest income - - -
Interest expense 6 98 206
Exchange differences (436) 433 676
Income taxes - (153) (154)
Share based payments 109 71 115
Increase in trade & other receivables (1,038) (793) (1,017)
Increase in trade &other payables 633 1,589 3,721
Cash (used in) / generated in operating activities (1,396) (510) 250
Dividend paid - - -
Income taxes received - 153 154
Interest paid (6) (98) (206)
Net cash (used in) / generated in operating activities (1,402) (455) 198
Cash flows from investing activities
Purchase of property, plant and equipment (47) (13) (40)
Purchase of intangible assets (87) (75) -
Development expenditure capitalised (467) (394) (920)
Interest received - - -
Net cash used in investing activities (601) (482) (960)
Cash flows from financing activities
Proceeds from borrowings - 1,250 1,250
Repayment of borrowings - (403) (2,523)
Repayment of lease liabilities (15) (16) (33)
Issue of shares 28 33 5,608
Expenses related to issue of shares - (323)
Net cash generated in financing activities 13 864 3,979
Net (decrease)/increase in cash (1,990) (73) 3,217
Cash and cash equivalents at the start of the period 7,518 4,301 4,301
Net (decrease)/increase in cash (1,990) (73) 3,217
Cash and cash equivalents at the end of the period 5,528 4,228 7,518
Notes to the interim financial statements for the six months ended 31 December 2021
1. Nature of activities and general information
PCI-PAL PLC is the Group's ultimate parent company and is a public limited
company domiciled in England and Wales (registration number 3869545). The
company's registered office is Unit 7, Gamma Terrace, Ransomes Europark,
Ipswich, Suffolk IP3 9FF. The Company's ordinary shares are traded on the AIM
Market of the London Stock Exchange. The Group's consolidated interim
financial statements (the "interim financial statements") for the period ended
31 December 2021 comprise the Company and its subsidiaries (the "Group").
The Company operates principally as a holding company. The main subsidiaries
provide organisations globally with secure cloud payment and data protection
solutions for any business communications environment.
The interim financial statements are presented in pounds sterling (£000),
which is also the functional currency of the parent company.
2. Basis of preparation
These consolidated interim financial statements have been prepared in accordance with international
accounting standards in conformity with the requirements of the Companies Act
2006, using the accounting policies which are consistent with those set out
in the Group's annual report and accounts for the year ended 30 June 2021.
The unaudited interim financial information for the period ended 31 December
2021 does not constitute statutory accounts within the meaning of Section 435
of the Companies Act 2006. The comparative figures for
the year ended 30 June 2021 are extracted from the statutory financial statements which have been filed with
the Registrar of Companies and contain an unqualified audit report and did not contain statements under Section
498 to 502 of the Companies Act 2006.
3. Dividends
Given the strategic growth plans of the Group it is not proposed to declare a
dividend for the period
4. Analysis of results
The first half performance of the Group can be further analysed as follows:
Six months to Six months to Six months to Six months to Six months to Six months to Six months to Six months to
Dec 21 Dec 21 Dec 21 Dec 21 Dec 20 Dec 20 Dec 20 Dec 20
EMEA North America Central costs Total EMEA North America Central costs Total
£000s £000s £000s £000s £000s £000s £000s £000s
Revenue
Recurring Fees 3,564 1,388 - 4,952 2,025 728 - 2,753
Set up and Professional Services Fees ((1)) 310 193 - 503 307 109 - 416
Other Sales 17 - - 17 21 - - 21
Total 3,891 1,581 - 5,472 2,353 837 - 3,190
Gross Profit 2.950 1,493 - 4,443 1,575 746 - 2,321
Margin % 75.8% 94.4% 81.2% 66.9% 89.1% 72.8%
Administrative Expenses (2,757) (2,017) (769) (5,543) (2,068) (1,847) (552) (4,467)
Profit/(Loss) from Operating Activities 193 (524) (769) (1,100) (493) (1,101) (552) (2,146)
Bank charges and Interest payable (18) (4) - (22) (13) (3) (92) (108)
Finance Income - - - - - - - -
Profit/ (Loss) before Taxation 175 (528) (769) (1,122) (506) (1,104) (644) (2,254)
((1)) Set up and Professional Services Fees represents the amortisation of
set up fees and other professional services income deferred under IFRS 15
5. Underlying financial performance analysis
The Group uses the following internal metric to calculate Adjusted EBITDA:
Six months to Six months to Six months to Six months to Six months to Six months to Six months to Six months to
Dec 21 Dec 21 Dec 21 Dec 21 Dec 20 Dec 20 Dec 20 Dec 20
EMEA North America Central Total EMEA North America Central Total
£000s £000s £000s £000s £000s £000s £000s £000s
Profit/(Loss) before Taxation 175 (528) (769) (1,122) (506) (1,104) (644) (2,254)
( )
Adjust for:
Expenses relating to share options - - 108 108 - - 71 71
Exceptional Items 34 46 205 285 - - - -
Exchange Loss/(Gain) 45 (375) - (330) (7) 373 - 366
Bank charges and Interest Payable 18 4 - 22 13 3 92 108
Finance Income - - - - - - - -
Adjusted Profit/(Loss) from Operating Activities 272 (853) (456) (1,037) (500) (728) (481) (1,709)
Depreciation & Amortisation 417 35 - 452 326 20 - 346
Adjusted EBITDA 689 (818) (456) (585) (174) (708) (481) (1,363)
6. Earnings per share
The basic and diluted earnings per share are calculated on the following profit and number of shares. Earnings
for the calculation of earnings per share is the net profit attributable to
equity holders of the parent.
Six months ended 31 December Six months ended 31 December Twelve months ended 30 June
2021 2020 2021
£000 £000 £000
Earnings for the purposes of basic and diluted earnings per
share
Loss after taxation (1,122) (2,101) (4,038)
Denominator '000 '000 '000
Weighted average number of shares in issue in the period 65,328 59,321 60,829
Dilutive effect of potential shares and share options 6,150 5,384 5,590
Number of shares used in calculating diluted earnings per share 71,478 64,705 66,419
Basic and diluted earnings per share expressed in pence (1.72) (3.54) (6.64)
There are no separate diluted earnings per share calculations shown as it is
considered to be anti-dilutive.
7. Subsequent events to 31 December 2021
There are no subsequent events to disclose.
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